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Backdoor Roth IRA in a different year - question on form 8606

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  • Backdoor Roth IRA in a different year - question on form 8606

    Hi all,

    I have learned so much in a short time from this site, so thanks in advance.

    I have read WCI's backdoor roth IRA tutorial but had a question I can't quite figure out.

     
    We are planning to do one for both myself and my wife in 2016.

    For myself, I will contribute 5500 to a nondeductible traditional IRA, then move it to a roth IRA after a few days.  Form 8606 for mine should be straightforward.


    For my wife, we made a nondeductible contribution in 2015 but left the money in there (mostly because we didn't really know what we were doing at the time).  She has no other SEP-iras, etc and no pre-tax money in this traditional IRA.

    We filled out form 8606 in 2015 to document that the nondeductible contribution was made, but we never did a roth conversion.


    Can we move that nondeductible contribution to a Roth IRA in 2016? Specifically, my question is how would the form 8606 for 2016 have to be filled out?

    Or should we just make a new nondeductible traditional IRA contribution for her in 2016 and move that to a Roth (would that simplify the paperwork by sort of starting over?)


    Thanks so much and sorry if this is confusing!



  • #2
    You were correct to file a form 8606 for 2015 to document the "basis" in your TIRA. Yes, you can convert that IRA to a Roth and pay taxes only on the growth since contributing to the TIRA.

    Go ahead and contribute to a 2016 TIRA (nondeductible) and then you can convert them both in one transaction. You are not starting over, just adding to the account. This is what you will do every year from now on, always filing a form 8606 to document.

    You may want to leave the TIRA account open with a few dollars if your institution will not allow you to keep a zero-balance account open. This will save add'l paperwork each year.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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